Description
If you're trying to partner up with the best companies, than many founders opt for the 'upside risk' route and offer intriguing terms undergoing downside protection themselves. In this term sheet, you will NOT find:

-An option pool: Removing the option pool from the pre-money valuation will only manipulate valuation artificially. New hires should dilute everyone the same way they benefit everyone.

-The company having to pay legal fees: It makes more sense for the company to make use of that money. With less back and forth, the fees generally stay very low anyway.

-Expiration: Founders are allowed to spend as much time as they want considering the offer. Commonly, people make decisions fast anyway.

-Confidentiality: The founders are allowed to talk with whoever they want to until after the deal has been sealed and they are expected to honor the deal. If investors discuss with each other what they have offered companies, it's fair that founders should be able to say what they have been offered.

-Participating preferred: This contains a 1x liquidation preference, but this could also be forgone in place of buying common shares. Downside protection should not be the focus in early-stage investing.

*Originally shared on Sam Altman's blog*

This business tool includes
1 Downloadable Term Sheet template in PDF Format